U.S. GDP Growth Slowed |in First Quarter of 2016

(CN) – The growth of the U.S. economy slowed to its weakest pace in two years for a period extending from January through March, the Commerce Department reported Thursday. The department’s Bureau of Economic Analysis blamed the skid on several factors, including slower growth in consumer spending, a decline in business investment, and exports hurt by a stronger dollar. Gross domestic product is the broadest measure of the U.S. economy’s health. During the first quarter of 2016, it grew by only 0.5 percent, the department said. That’s down from 1.4 percent growth during the fourth quarter of 2015. The latest GDP numbers for a first quarter since January to March 2014, when the economy contracted 0.9 percent. But economists said the numbers do not necessarily portend a bleak remainder of the year for the economy. Over the past seven years, the nation’s GDP has started out weak, only to rebound during the second quarter. A consensus of forecasts suggests the economy will growth at a rate of about 2 percent or slightly below for the remainder of the year. Jason Furman, chairman of the Council of Economic Advisers, responded to the numbers on behalf of the White House, by noting that during the first quarter strong growth in residential investment boosted real GDP growth, but weakness in business investment and net exports—exacerbated by weak foreign demand and low oil prices—weighed on growth. “Consumer spending grew at a moderate pace in the first quarter. Overall, the most stable and persistent components of output — consumption and fixed investment—rose 2.6 percent over the past four quarters,” Furman said. “Nevertheless, labor market data remain robust, with continuing private-sector job creation, increasing labor force participation, and historically low levels of unemployment insurance claims,” he continued. “Today’s report underscores that there is more work to do, and the president will continue to call on Congress to support policies that will boost our long-run growth and living standards, including policies to support innovation and investments in infrastructure and job training and to promote greater competition across the economy, as well as high-standards free trade agreements like the Trans-Pacific Partnership,” Furman said.